Business Leadership South Africa (BLSA), a lobby group for large corporations, has bemoaned the loss of the African Growth and Opportunity Act (AGOA) and urged a turn to new trade relationships, especially with China. AGOA was a preferential trade agreement set up in 2000 by the United States (US) to allow duty-free access to the US market for African exporters. It expired last month.

Yesterday, BLSA, via its website, said that: “The expiry of the African Growth and Opportunity Act…marks a watershed moment in the US-South Africa relationship. While Agoa had been effectively undermined by the Trump tariffs imposed earlier this year, it nevertheless provided a backstop for our trade relationship – a framework and a reason to work hard towards agreement on new trade terms. The Trump administration indicated a desire to extend Agoa by one year shortly before its expiry, but Congress has been unable to act on that ambition due to the government shutdown. There remains a possibility that an extension could be included in legislation required to end the shutdown, but even then, it is unclear whether South Africa would be included, given the broader issues that have arisen between our two countries.”

South Africa’s relationship with Washington has worsened dramatically over the past decade. South African leaders have routinely accused the US of racism and imperialism whilst forging closer relationships with China, Russia, and Iran.

US officials and lawmakers have in turn upped tariff rates on South Africa, accused it of threatening US national security interests, and drafted legislation to sanction South African leaders.

Missteps

According to BLSA: “Diplomatic missteps – most notably the Lady R debacle in 2023 – had already damaged relations between our countries even before the Trump administration took office. That loss of goodwill, combined with perceptions about South Africa’s stance on Russia, has contributed significantly to the difficult situation we face today. We must be honest about this: foreign policy decisions have direct economic consequences, and ambiguity rarely serves national interests.”

The lapsing of AGOA comes as China and Russia make great strides in deepening their footholds on the African continent. In West Africa, Russian-backed military actors have largely displaced the French from their historical African stomping ground. Across the continent, Chinese fixed investment efforts now eclipse US investment.

In what will no doubt raise eyebrows in Washington, BLSA said that to counter the consequences of the loss of AGOA, South Africa should both pursue new trade pacts with China and other BRICS countries (BRICS is a global intergovernmental body, with the acronym coming from its founding members – Brazil, Russia, India, China, and South Africa).

“China is moving in precisely the opposite direction to the US, having announced duty-free access for all African nations with which it maintains diplomatic ties. This represents a fundamental realignment of trade patterns that could reshape Africa’s global orientation for decades to come. The Brics structure also promises several trade opportunities, as does the African Continental Free Trade Agreement, though the latter faces significant implementation challenges around infrastructure and regulatory harmonisation,” BLSA said.

BLSA’s comments on building closer ties with China will likely worry some of South Africa’s most established global corporations that chiefly hail from Western Europe and North America, and which face growing displacement pressures as Chinese firms develop a foothold in the South African market.

Pivot

Yet even if South Africa were to pivot more strongly to the East, the country’s domestic infrastructure and policy snarl-ups would still need to be addressed before higher levels of economic growth could be recorded.

According to BLSA: “While managing international trade relationships, we must simultaneously focus on what lies entirely within our control: domestic reforms. An accelerated reform agenda can significantly lessen the negative effects of Agoa’s end, compounded by the Trump tariffs. Certain regions, particularly the Eastern Cape with its concentration of automotive manufacturing, have been seriously affected by these developments. We need to drive reform as rapidly as possible to create new opportunities and strengthen our competitive position.”

Whilst US actors are concerned that the policies of the Trump White House and Congress may drive South Africa deeper into a Chinese and Russian orbit, key US policy makers say that process was already well underway long before Trump came to power.